2010 is turning out to be the year of Fund Marketers' Lib.
Content-rich e-mail campaigns and social media that showcase economists' and leading portfolio managers' opinions, are replacing hard mutual fund sales pitches. In fact, 50% of the 16 largest fund companies, including Fidelity, Putnam and Vanguard, are on Twitter, according to New York market research firm Corporate Insight. Forty percent are using Facebook, and 19% are blogging.
Federated Investors, for one, has traditionally relied on its internal and external wholesaler force of 180 to reach its key intermediary advisers and RIAs-supplying its salespeople with standard sales sheets, marketing materials and product brochures.
This year, however, Federated has reinvigorated its marketing with an entire array of digital communications-e-mails, podcasts, whitepapers, web commentaries, iTunes, Facebook, Twitter and LinkedIn-to bring its brain trust and ideas to life.
"These aren't product pushes," said J.T. Tuskan, Federated SVP and director of marketing and corporate communications. "We are still relying on the product people to make the sale. But offering high-value content - such as commentary on the Fed or the CIO of our cash business talking about rates - increases mind share."
And Federated's weekly e-mail campaign is a huge undertaking, reaching 40,000 advisers. In addition, Federated also sends out a monthly e-mail to 16,000 top-producing financial advisers.
By April, Federated plans to debut a fully streamlined and "de-cluttered" website to better showcase its investment ideas. In conjunction, Federated aims to have the regulatory archival software in place to let investors interact with Federated's investment personnel on social media.
Virtus Investment Partners, the former investment management arm of Phoenix Companies, also uses mass-market e-mail blasts to reach 70,000 financial advisers, primarily with practice management and sales ideas. On Twitter, Virtus Chief Market Strategist Joe Terranova, a regular on CNBC's "Fast Money" program, has attracted than 4,000 followers with his economic commentary.
"Advisers and investors are going to follow companies that they like and that have content they value," noted Tom O'Donnell, Virtus vice president of e-business/strategic marketing. "There's been a shift where people are signing up for who they want to follow, rather than being bombarded."
Franklin Templeton is also taking a more conceptual approach to its marketing and selectively supporting it with detailed e-mails and videos. However, Franklin is sticking to a more traditional and consistent collateral message and method. The centerpiece of its marketing is a 12-page brochure called "2020 Vision: The Case for Equities in the Decade Ahead" - of which advisers have already ordered more than 320,000 copies. The piece makes the case for investing in equities, including the reminder: "Innovation will surprise us...again." And: "Quality companies are not short-sighted. The world is changing at a rapid pace, and many companies are at the forefront of those changes."
"Out of all of our campaigns over the years, this is among the top, if not the highest, in demand," said David McSpadden, SVP of global advisory services at Franklin.
In addition, Mark Mobius, executive chairman of the Templeton emerging markets team, has attracted 1,988 followers on Twitter, where he talks about investment characteristics he looks for.
Leveraged and bank funds, certainly, may be on opposite ends of the risk spectrum, but both have found themselves in favor following the credit crisis.
Following the divestiture of many mutual fund divisions by banks, and amid a more conservative approach by many investors, "bank fund families are committing to telling their story," said Dan Sondhelm, partner and vice president with marketing and public relations firm SunStar Strategic, Alexandria, Va. "We have seen a number of bank fund families figuring out how to reposition themselves and then carrying this out through marketing, PR and an enhanced sales team."
The aim is to reach and gain better "access to RIAs through e-mail marketing, webinars and access to their portfolio managers," Sondhelm said.
Direxion Funds, which offers leveraged and inverse exchange-traded funds, such as the Daily Large Cap Bull 3x Shares ETF, and alternative mutual funds, such as the Commodity Trends Strategy Fund, has found that the heightened volatility in the markets has attracted assets. Within six months of the company's launch in November 2008, its ETFs pulled in $4 billion. Today, ETF asests are at $7 billion.
While Direxion is working to extend its brand awareness, it is doing so within the confines of Securities and Exchange Commission guidance on better educating investors on the risks involved with these funds, said Andy O'Rourke, SVP and marketing director at Direxion.
"Leveraged investments are not well-suited for the mainstream investor," O'Rourke admitted. "They are a niche product that should be used only by a subset of the larger investing public. Regulators have accused the products of being oversold to the wrong people, like selling cigarettes to minors. Our effort is largely one of product and brand awareness with a suitability and cautionary rider to make sure people understand what they are buying," O'Rourke said.
But in addition to a sizeable television and print advertising campaign disseminating this cautionary tale, Direxion has an active "grassroots marketing effort" consisting of e-mail blasts, newsletters and print advertisements in trade publications aimed at financial advisers and institutional investors, including mutual fund portfolio managers.
Obtaining names from industry conferences and other sales leads, Direxion continues to build a robust client list in its Eloqua contact management system. "This is one of the few CMS on the higher end, which is more involved and actually allows you to have a lead scoring process and tracks e-mail and website activity metrics," O'Rourke said.
The content of Direxion's e-mails include its "Xchange" newsletter, for instance, which gives trading volume, liquidity information and trends. "This is what the institutional investors are looking for. It [helps the funds] become more attractive to them," O'Rourke said.
To promote its alternative mutual funds, Direxion has been focusing on the "naughties" decade of no growth and how specialized funds can work in the context of a larger portfolio. "We join the debate on Modern Portfolio Theory, not necessarily to say that it is dead, but to say that perhaps it needs to be more modern and maybe some things have changed since it was originally put together," O'Rourke said.